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Takata recall's big impact on the auto industry

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(IIHS)

The airbag maker Takata announced this week that millions of their airbags are defective, an event likely to trigger the biggest automotive recall in U.S. history.

The Takata airbag recall is complicated on many levels and is raising big questions.

What will happen to the supplier?

How will this recall impact the auto industry as a whole?

The good news here is the auto industry is getting pretty good at handling large-scale recalls after the GM and Toyota disasters.

But the bad news is automakers don't have many choices when it comes to airbag suppliers. That means Takata is likely to remain in business even though many suppliers likely couldn't supply a recall of this scale.

The fear of shrapnel firing into your face will send many car owners to the dealership for a replacement. However, auto supply analyst Alan Baum says most drivers are likely to hear a disappointing answer from the service department.

"The answer is: ‘I don't know. We don't have the parts, we'll keep you on file and we'll let you know,'" said Baum. "That's obviously not a great response."

The sudden demand for 30 million replacement airbags, in addition to the need for airbags for new models, will push the supply chain to its limit.

"There's not a lot of players who can step up to the plate and solve this problem," said Baum. "There has been a shifting of new and for new vehicles of Takata losing some business."

Baum also said this means Takata will probably survive this controversy.

"If Takata disappeared tomorrow that would be a crisis event for the entire industry because the rest of the airbag manufacturers cannot pick up this volume."

Another airbag supplier, Autoliv, has even said it would need a new manufacturing facility—something that would take years to build—to make enough airbags to meet this recall demand.

So it looks like it could take a very long time for all of these cars to get fixed.


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